OPEC Could Extend Oil Production Cutbacks Until End of June, Kuwait Says
Kuwait Expects Oil Cuts to Be Extended Until July (Update2)
Kuwait, Oct. 20 (Bloomberg) -- The Organization of
Petroleum Exporting Countries is likely to extend oil output
cuts for three months until the end of June, a Kuwaiti oil
official said.
Kuwait ``expects the current cuts to be extended until at
least the end of the second quarter,' the unidentified official
said, according to Kuwait's official KUNA news agency. ``OPEC
could increase production in the third quarter next year after
it makes sure global oil stockpiles are reasonable,' he said.
OPEC's current output cuts, which expire at the end of
March, have helped benchmark Brent crude oil rise to $21.84 a
barrel from less than $10 in December. OPEC members need to
amend those cuts at some point. If they keep production
restrained, oil prices could soar, encouraging competition from
non-OPEC producers and threatening the group's world market
share.
At a meeting in Vienna in September, producers said they
would maintain the cuts at least through March. Mexico, Saudi
Arabia and Venezuela will reaffirm that commitment in a meeting
in Saudi Arabia in November, Mexico's oil minister has said.
Kuwait, the most vocal of OPEC's 11-members in calling for
oil output cuts over the last 18 months, has said April would be
a bad month to boost oil output because demand is typically
weaker then as rising temperatures in the Northern Hemisphere
reduce the need for heating oil.
Oil producers are reluctant to boost output before a global
oil glut that caused prices to hit a 12-year low in December has
been removed, analysts said.
``OPEC's cutbacks could cause the largest oil stock draw-
down in history over the next four months as winter kicks-in,'
said Mark Keenan, a broker with Prudential-Bache (Futures) Ltd.
``We expect U.S. stocks to be reduced to 278 million barrels by
the end of the year,' he said.
The American Petroleum Institute reported earlier this
month that U.S. oil inventories fell 7.14 million barrels to
298.94 million barrels, the lowest level since September 1997.
The northern hemisphere winter is expected to boost global
oil demand by 2.6 million barrels a day over demand in the third
quarter, the largest increase in six years, reported the
Washington-based Petroleum Finance Company.
The gain in oil prices this year marks OPEC's biggest
success in boosting oil prices since the 1970s after years of
ineffectiveness and squabbling. Producers expect prices to go
higher.
``We expect oil prices will increase with OPEC's continued
commitment and the onset of winter,' said the Kuwait official.
That would be good news for Saudi Arabia, Iran and other
OPEC members, whose revenue plunged by about one-third, or $50
billion, to about $110 billion last year because of low oil
prices. |
